India does a first on cottonseed oil, set to import as international prices turn cheaper than domestic ones

Published On: 08, Dec 2017 | Source: financialexpress.com

India will import cottonseed for the first time as the international prices are cheaper than domestic market on account of lower import duty. According to the industry observers, if the government doesn’t take corrective action, it will hurt the domestic cottonseed oil industry and farmers will also affected as it will pressurise the cotton prices in future.

The Solvent Extractors’ Association of India (SEAI) has urged the government to raise the import duty on crude and refined cottonseed oil to provide relief to cotton farmers. The customs duty for crude and refined vegetable oils was changed recently but the duty on crude and refined cottonseed oil remains unchanged at 12.5% and 20% respectively. “India has never imported cottonseed oil in any form but because of huge advantage of customs duty, import of the oil has started for the first time. About 10,000-15,000 tonne of cottonseed oil have traded for January shipment. The association has sent a representation to the government to plug this loophole, or else cotton oil import would rise detrimental to the interest of cotton farmers,” said Atul Chaturvedi, president of SEA and chief executive officer of Adani Wilmar. According to cottonseed oil millers, in domestic market, prices of the oil is at about `65,000-66,000 per tonne while the imported cottonseed oil prices is lower by `3,000 a tonne. India produces about 1.2 million tonne cottonseed oil every year and nearly 60-65% production of it is done in Gujarat. The state has over 1,000 cottonseed oil mills. Pradeep Khetani, managing partner of Ankur Oil Industries, said, “As the cotton production is good this year, prices of cottonseed oil is already lower. Imported cottonseed oil will further pressurise the prices and this will affect the cotton rates which is not good for farmers. Government should interfere in it.” Praful Patel, vice president of Gujarat Cottonseed Crushers Association said, “Gujarat is leading cotton producing state and because of it, large numbers of crushing units have been established in the state. If cottonseed oil import will rise, small crushing units may lose the business and lack of demand may cause shutdown of these units.” SEAI officials warned that if the government will not increase the import duty, cottonseed oil import could rise to about 50,000 tonne this year. B V Mehta, executive director of SEAI said, “We have made representation to the government to increase the import duty on crude and refined cottonseed oil. If government will not do this, import of the oil will significantly increase which is not good for farmers and crushers.”